DraftUNCONDITIONALBASICINCOME

SMARTTOKENSMay11,2017

BernardLietaerArieBenDavid

CONTEXTOne of the main barriers for the use of complementary currencies is that their acceptance islimitedandtherefore,theirliquidityislow.TheBancorProtocolintroducesanewtechnologythatreliesonsmartcontractstoimprovetheconvertibilityandliquidityofcomplementarycurrencies.ItoperatesontheEthereumblockchainplatform,whichguaranteesthesecurityandtransparencyofalltransactions.Themainideaistoallowcomplementarycurrenciestobeissuedbyusersattheconditionthatthetokenissuedisholdingoneormorereserves,suchasdigitalorconventionalcurrenciesaswellasotherassets.Thiswillenableanycurrencyusingthisprotocoltobeexchangedforanyothercurrencywhichispartofthe‘ReserveBasket’,withoutneedingacounterparttodoso.Ifyouwanttoexchangeyourcurrency,youdoitthroughthesmartcontract.Hence,eachperson’sinteractionisvis-à-visthesmartcontract,thus,tokensusedonsuchplatformsarecalled‘SmartTokens’.ThisuniqueinnovationhasthepotentialtobeappliedinendlessprojectsandoneoftheseistheideaofconferringabasicincomeusingtheBancorProtocol,whichcouldberelatedtoasathirdexampleintheBancorProtocolWhitePaper.BASICINCOME(BI)Weassumehere thatwe aredealing at first onlywith an identifiablepopulation, such as smallfarmersintheEuropeanUnionreceivingabasicincomeof1000Eurospermonth.Thepopulationcouldalsobeexpandedlattertoincludeanyotherdisadvantagedcommunityorindividuals.Onecouldevenextendthisconcepttoincludeallcitizens,becomingtherebyaUniversalBasicIncome(UBI).HowitworkswiththeFarmerCoinexample:A‘ReserveBasket’basedon2typesofassetswillbeestablishedontheEthereumBlockchain,asexplainedintheBancorProtocol.Eachofthetwoitems(aselaboratedbelow)represents25%ofthe Reserve, thus making a total of 50% of Reserve. The balance of 50% becomes thereforeavailable as a “token amplifier”. This token amplification enables the farmers to financiallyempowerthemselvesthroughtheir loyalconsumers,andit isbackedbythefutureproducethatwillbeproducedbythefarmers.Thisshouldhelpinreducingtheirdebtsandinterestpaymentsthatseverelyhurttheirbusinessandtheireconomicabilitytosurvive.Thefarmerswillbeableto

sell the smart tokens they issued at a discount, as if theywere ‘prepaid cards’ or ‘vouchers’, inwhichthecustomerpaysforexample100andreceivestokensvaluedat120.EachFarmerCointakestheformofanEthereumbasedblockchainthathastworeservesasdefinedintheBancorProtocol:ReserveTypeOnewould be inEuros (or any other conventional legal tender currency that isusedinaparticularcountryorregion),intheamountof25%ofthevalueofallthetokensissued.ReserveTypeTwo would be in Bancor tokens also in the amount of 25% of the value of thetokensthatwereissuedinaformofBancor,toenableconvertibilitywithallusersoftheBancorProtocol,includingindividuals,businessesandothersocialenterprises.A similarmodel could be used for example for a “GreekCoin”where a Crowdsale provides theresources for reserves for a smart token helping the Greek population that is so much underduressnow…ANetworkofNetworks:Eachfarmcommunitywillhaveits’own‘SmartTokens’andtheywillbeconnectedtotheothers in the GroupMarket network of farmers’ marketplaces that will be all connectedthroughtheFarmerCoinviatheBancorTokenintheEthereumblockchainspace.Governance:Acomplementarycurrencyshouldbemanagedasacommonsofitsusers.Itisworthemphasizingthat governance is a key element in this model that should be discussed extensively with thecommunity.UsingtheBancorProtocolonalargescale“forreal”withoutanintegratedgovernancesystemwouldbeirresponsible.WeneedatleastsomeofthefunctionsofsystemsliketheAragonsystem (https://aragon.one), that is also operating on top of the EthereumBlockchain. Indeed,AragonmakesavailableallthetoolsnecessarytoimplementthegovernanceasacommonsofitsusersaccordingtoElinorOstrom’s8principles:1Definecleargroupboundaries.2.Matchrulesgoverninguseofcommongoodstolocalneedsandconditions.3.Ensurethatthoseaffectedbytherulescanparticipateinmodifyingtherules.4.Makesuretherule-makingrightsofcommunitymembersarerespectedbyoutsideauthorities.5.Developasystem,carriedoutbycommunitymembers,formonitoringmembers’behavior.6.Usegraduatedsanctionsforruleviolators.7.Provideaccessible,low-costmeansfordisputeresolution.8.Buildresponsibilityforgoverningthecommonresourceinnestedtiersfromthelowestleveluptotheentireinterconnectedsystem.

Thereare7possiblesourcesofmoneythatcouldbeusedtofillupbothReserves:1.Governmentalgrantorsubsidyinconventionalnationalmoney.2.ImpactInvestmentFund.3.Not-forprofitFoundationthatsupportstheBasicIncome’spurpose.4.MoneythatmayberaisedbyaFarmerCoinCrowdsale.5.IndividualsandEnterprisesthatcanbuydiscountedTokens.

6.TaxcreditsthatcanbeissuedbygovernmentaloraMunicipalauthority(tobeimplementedinalaterphase,onceanagreementwithtaxauthoritiesisreached)7. The Bancor Foundation can also donate ‘Bancor Smart Tokens’ readily primed with bancorreservestostarttheinitialreserve.Ametaphorexplaininghowitallworksinafewwords:1. The blockchain Ethereum platform including the Bancor Protocol and the Basic Income SmartTokenthattogethermakeallcommunitiesthriveplaysaroleliketheSunforourplanet.2.TheGovernanceoftheFarmerCoinasacommonsoftheirusersusing the functionsofAragon tomeetthe8criteriaofElinorOstromplaysmetaphoricallytheroleofthesky.3.ThecommunitytrustbackedbytheBancorreserveisthehealthysoil.4.ThethrivingwalletofthecommunitythatcontinuouslycreatesnewapplesislikeanAppleTree.5.TheBasicIncomethatthetargetfarmerswillgetonceaweekisindicatedbytherefrigeratorfullofappleswiththesmall“gifting”basket.6.Thetokensthatthemembersexchangeforgoods&servicestofacilitateunmetneedswithunusedresourcesaretheapples.7.Thexamountoftokensthatgetoutofcirculationonceamonth is indicatedbytheagingRottenapples.